The purpose of reconciling your cash clearing is to verify that you have correctly recorded and deposited your daily point of sale activity. The idea is that during a day you perform sales and bring in monies. The computer records the monies that you take in, and provides a summary report for the days monetary transactions. At the end of the day you physically count the money from the day that is now ready to be deposited. Normally 100% of the monies collected will be deposited. The summary report at the end of the day when compared with the physical count is the first thing we can do to check the accuracy of what is entered into System Five. This first check allows us to reconcile the count of monies we physically have at the end of the day against the computer totals of those same monies. If there is a difference we attempt to ascertain and rectify the difference.

Once we have fixed any differences appropriately we are ready to close the day in the General Ledger (GL). This is where all of the key processes are recorded. A journal entry is used to post the the GL. The purpose of the journal entry is to record the movement of funds from our cash clearing account. Normally this is physically deposited into your bank at the end of each day, so the destination of the funds would be your bank account. Now we are ready to do the most important step in reconciling our monies from the end of the day, we are going to see if everything we have done adds up in the GL. To do this we check the balance of the cash clearing account after the bank deposit has been posted. In a normal situation the daily starting bank balance in the cash clearing account is $0. This means we are looking for a bank balance of $0 during this check. If it is not $0 then we are not reconciled and there are many ways that accountants, skilled bookkeepers, and savy business owners use to reconcile this account.

Key Factors in Determining if we are Reconciled

  • Summary of monies counted at the end of each day match the computer totals for each of the monies.
  • GL balance at entry of End of Day journal entry brings the Cash Clearing account balance to $0.

What if I don't reconcile the GL

The only way to make sure the sum of all of the work you are doing in the system is correct is to reconcile the GL. There are many places to make mistakes. Checking that the balance comes to $0 allows you to verify that the system, and all of the policies & procedures you use in daily business operation add up to the correct outcome. It is important to check on this regularly so you can find ways to stop things from going out further.

Types of things that throw out your cash clearing

  • Back dating invoices or payments
  • Changing the date on invoices or payments
  • Changing invoices from previous days. Adding product, removing product, changing quantities, changing prices, changing taxes or anything else that changes the total of the invoice will change the amount of change given for cash invoices. Any changes to tendered amounts will effect the GL on that date, but be recorded on todays POS Transaction summary report.
  • Incomplete deposit journal entries, or entries with incorrect amounts
  • Deposit journal entries that only deposit part of the funds received